Before the Environmental Management Commission Presentation by James C Gulick Senior Deputy Attorney General May 12 2011 Agreement Announced April 14 2011 Parties EPA TVA ID: 1032609
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1. Air Quality Settlement with Tennessee Valley AuthorityBefore the Environmental Management Commission Presentation byJames C. Gulick, Senior Deputy Attorney GeneralMay 12, 2011
2. Agreement Announced April 14, 2011 Parties:EPATVANorth Carolina, Alabama, Tennessee and KentuckyThe National Parks Conservation Association, Sierra Club and Our Children’s Earth Foundation
3. Format of AgreementFederal Facilities Compliance Agreement (“FFCA”)TVA and EPAFederal Consent DecreePlaintiffs: NC, AL, KY, TN, National Parks Conservation Association, Sierra Club and Our Children’s Earth FoundationDefendant: TVA
4. Public CommentComment period ends May 20, 2011If comments do not warrant change in FFCA, parties will ask Court to enter Decree as isIf Court enters Decree, Decree is final and effective
5. TVA’s Plants
6. Background1999: EPA alleged numerous violations by TVA of CAA New Source Review (NSR) programOrdered TVA to comply with NSR requirementsPollutants at issue: SO2, NOX and particulates2004: U.S. Court of Appeals dismissed EPA’s orders on procedural groundsEffectively barred EPA from pursuing case any further
7. NC Clean Smokestacks Act2002: NC enacted the Clean Smokestacks ActRequires Duke and Progress to reduce SO2 and NOX emissionsSO2: 130,000 ton combined cap by 2013NOX: 56,000 ton combined cap by 2009§10: Directs State to use “all available resources” to effect similar reductions from sources in other States, “including the Tennessee Valley Authority”
8. Carrying Out Section 10NegotiationCAA §126 Petition (and associated law suits)Challenge to EPA’s Clean Air Interstate RuleEPA is poised to significantly strengthen its regional interstate SO2/NOX pollution program next monthClean Air Transport Rule
9. Public Nuisance Action Against TVAJan. 2006: AG sued TVA alleging that emissions of SO2 and NOX from TVA’s coal-fired power plants were a public nuisance Jan. 2009: U.S. District Court found that TVA’s four power plants located within 100 miles of NC were creating a nuisance in NCKingston, John Sevier, Bull Run and Widows CreekEstablished schedule for TVA to install state-of-the-art controls and set emission limits
10. Appeal & NegotiationsDec. 2009NC, TVA, EPA and other parties began negotiations to reach a global settlement of a variety of air quality claims against TVAAppeal of nuisance judgment pendingJuly 2010: U.S. Appeals Court reverses District Court rulingFeb. 2011: NC seeks Supreme Court reviewNegotiations continue throughout
11. The AgreementStructure:The FFCA and the Decree are interrelatedContain virtually identical substantive terms Scope: Agreement will resolve the claims of:NC (public nuisance action, NSR claims and the §126 Petition with respect to TVA) NSR claims of EPA, regulating States and NGOs
12. Emission Limits Cap emissions of SO2 and NOX from all eleven TVA facilities in the aggregate Caps would decline annually until reaching the final cap in 2019
13. Calendar YearTons of NOxTons of SO22011100,600285,0002012100,600285,000201390,791235,518201486,842228,107201583,042220,631201670,667175,626201764,951164,257201852,000121,6992019, and each year thereafter52,000110,000
14. Control RequirementsEvery coal-fired unit (except some at Shawnee in SW KY) must:Be controlled with SCR and scrubber;Be repowered to burn biomass; orBe retired Unlikely that TVA would repower more than 1 or 2 units to biomass Agreement establishes specific dates for control of each unit
15. “100-Mile Plants”TVA’s John Sevier, Bull Run, Kingston and Widows Creek plants are within 100 miles of NCWere focus of Judgment in nuisance case Under the Agreement, the 100-mile plants would be among the first to be controlled or retired
16. Kingston & Bull RunSince the trial of the nuisance suit, TVA has completed pollution controls (SCRs and scrubbers) on all 10 units at Kingston and Bull RunAgreement would require those controls (and all other existing or new controls) to be operated at all times that the unit’s boiler is operating
17. John SevierIdle all 4 units by 12/31/2012TVA would be allowed to bring 2 units online if they are controlled (by SCRs and scrubbers) or repowered by 12/31/2015.The other 2 units to be retired permanently Nuisance judgment required controls on all four units by the end of 2011TVA is constructing a natural gas plant at John Sevier site to replace lost power generation
18. Widows CreekTVA to be required to shutdown the 6 smaller, uncontrolled units on a staggered schedule beginning 7/31/2013 and ending 7/31/2015 Controls on the 2 larger units have been upgradedNuisance judgment required controls on all units by the end of 2013
19. Other PlantsJohnsonvilleHuge, old, uncontrolledAfter the 100-mile plants, Johnsonville has greatest impact on NC among other TVA plantsWill be required to be shutdown entirely on a staggered schedule beginning 12/31/2015 and ending 12/31/2017Colbert, Gallatin, Paradise, Allen and Cumberland: SCR/scrubber, repower or retire
20. Comparison to Clean SmokestacksNature of Remedy: Systemwide cap – same as Clean Smokestacks Act (CSA)Level of Control and Timing: The TVA remedy takes longer to achieve but:Level of TVA cap is lower than CSA (adjusted for system size)TVA is required to control or shutdown virtually all unitsTVA remedy is substantially equivalent to CSA
21. Comparison to Nuisance JudgmentJudgment would likely have resulted in lower emissions of SO2 and NOX for only a few years By no later than 2015 and continuously thereafter, emissions under the Agreement lower than under the JudgmentCumulative emissions are particularly important for ecological impactsAgreement’s SO2 and NOX caps even lower than those NC requested at trial
22. MitigationTVA to spend $290 million on environmental mitigation projects to address emissions impacts Most of the money to be spent on energy efficiency and renewable energy projectsTVA to pay $60 million to NC, AL, KY and TN to implement projects of the States’ choosing from broad categories of energy efficiency and renewable energy projects listed in the DecreeNC to receive $11.2 million
23. Emissions AllowancesTVA required to retire all SO2 and NOX marketable pollution credits, whether under the Acid Rain Program, the NOX SIP Call or any other program, that result from emission reductions required by the Agreement Similar to Clean SmokestacksGoes beyond Judgment in nuisance case
24. Relinquishment of ClaimsAll plaintiffs (incl. NC) release all NSR, New Source Performance Standard (NSPS) and minor NSR claims (including follow-on Title V claims) that pre-date the Agreement All plaintiffs (incl. NC) release NSR, NSPS, minor NSR and follow-on Title V claims that post-date the Agreement only if those claims are based on specific actions required by the Decree (e.g., installation of a scrubber)
25. Relinquishment of Claims (cont’d)Because the Agreement fully meets NC’s objectives, upon final entry of the Consent Decree, NC to:withdraw its petition for Supreme Court review of the nuisance casewithdraw its §126 Petition with respect to TVA’s facilities
26. Benefits of the AgreementThe air quality benefits of the Agreement to NC will be very great by the time it is fully implemented. These include: Substantial health benefits Environmental benefits of reduced acid deposition and improved visibilityEconomic benefits
27. Estimating BenefitsNC did not estimate the benefits of the emission reductions under the Agreement specifically, butReductions under the Agreement exceed the reductions that NC sought in the nuisance case and that NC’s experts modeled for trialBenefits from reductions sought at trial meticulously estimated
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29. Area with at Least 40 Days Perceptible Visibility Improvements with Additional TVA Controls (Modeled for Trial)
30. Acid DepositionAt high concentrations, dissolved inorganic aluminum hinders the uptake of water and nutrients by tree rootsDocumented at NC Class 1 areas and at Mt. MitchellLikely occurring in other State parks and natural areas in NC mountainsAlters high-elevation forest soilsAccelerates leaching losses of calcium and magnesiumIncreases concentrations of dissolved inorganic aluminum in soil waters
31. Acid Deposition (cont’d)NC’s trial experts demonstrated that reductions in emissions will benefit mountain soils and vegetationBecause reductions under the Agreement exceed NC’s proposed remedy in the nuisance case, significant benefits are expectedTVA required to give $1 million each to National Park Service and Forest Service to improve, protect, or rehabilitate park and forest lands that have been injured by emissions from TVA's plants
32. Economic BenefitsDirect payment of $11.2 million over five years for projects in NCSignificant health care costs avoidedBenefits to tourism industry from improved visibility in NC Mountains
33. SummaryComprehensive settlement of claims against TVANot final until after public comment periodFully implements CSA §10 regarding TVASignificant benefits to NC public health, environment and economy